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<br />200800719
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<br />If the amounts held by Lender for Escrow Items exceed the amount.'> permitted to be held by RESP A, Lender shall
<br />account to Borrower for the excess funds as required by RESP A. If the amounts of funds held by Lender at any time are
<br />not sufficient to pay the Escrow Items when due, Lender may notify the Borrower and require Borrower to make up the
<br />shortage as permitted by RESP A.
<br />The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument. If Borrower
<br />tenders to Lender the full payment of all such sums, Borrower's account shall be credited with the balance remaining for
<br />all installment items (a), (b), and (c) and any mortgage insurance premium installment that Lender has not become
<br />obligated to pay to the Secretary, and Lender shall promptly refund any excess funds to Borrower. Immediately prior to
<br />a foreclosure sale of the Property or its acquisition by Lender, Borrower's account shall be credited with any balance
<br />re!llaining for all installments for items (a), (b), and (c).
<br />3. Application of Payments. All payments under paragraphs 1 and 2 shall be applied by Lender as follows:
<br />Ei..rst, to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by the
<br />Secretary instead of the monthly mortgage insurance premium;
<br />&l;;nnd, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard
<br />insurance premiums, as required;
<br />IhiId, to interest due under the Note;
<br />Emlnh, to amortization of the principal of the Note; and
<br />Eifih, to late charges due under the Note.
<br />4. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Property, whether
<br />now in existence or subsequently erected, against any hazards, casualties, and contingencies, including fire, for which
<br />Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires.
<br />Borrower shall also insure all improvements on the Property, whether now in existence or subsequently erected, against
<br />loss by floods to the extent required by the Secretary. All insurance shall be carried with companies approved by Lender.
<br />The insurance policies and any renewals shall be held by Lender and shall include loss payable clauses in favor of, and
<br />in a form acceptable to, Lender.
<br />In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof of loss if not
<br />made promptly by Borrower. Each insurance company concerned is hereby authorized and directed to make payment for
<br />such loss directly to Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may
<br />be applied by Lender, at it.'> option, either (a) to the reduction of the indebtedness under the Note and this Security
<br />Instrument, first to any delinquent amounts applied in the order in paragraph 3, and then to prepayment of principal, or
<br />(b) to the restoration or repair of the damaged Property. Any application of the proceeds to the principal shall not extend
<br />or postpone the due date of the monthly payments which arc referred to in paragraph 2, or change the amount of such
<br />payments. Any excess insurance proceeds over an amount required to pay all outstanding indebtedness under the Note
<br />and this Security Instrument shall be paid to the entity legally entitled thereto.
<br />In the event of foreclosure of this Security Instrument or other transfer of title to the Property that extinguishes the
<br />indebtedness, all right, title and interest of Borrower in and to insurance policies in force shall pass to the purchaser.
<br />5, Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application;
<br />Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's principal residence within sixty days
<br />after the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Property) and shall
<br />continue to occupy the Property as Borrower's principal residence for at least one year after the date of occupancy,
<br />unless Lender determines that requirement will cause undue hardship for Borrower, or unless extenuating circumstances
<br />exist which are beyond Borrower's control. Borrower shall notify Lender of any extenuating circumstances. Borrower
<br />shall not commit waste or destroy, damage or substantially change the Property or allow the Property to deteriorate,
<br />reasonable wear and tear excepted. Lender may inspect the Property if the Property is vacant or abandoned or the loan is
<br />in default. Lender may take reasonable action to protect and preserve such vacant or abandoned Property. Borrower shall
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<br />.-4R(NE) (0407)
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<br />Initials: M.J!J
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